Rand weaker on stronger dollar, JSE gains

CAPE TOWN - The rand weakened against a strong greenback yesterday a persistent risk-off sentiment for emerging markets ahead of today’s Federal Open Market Committee meeting.

At 5 pm on Monday, the rand bid 1.01% weaker at R12.4575 to the dollar, than its close on Friday.

By 5pm yesterday, the local currency had lost further ground, bidding at R12.6417 to the greenback.

“The rand weakness is not an isolated move in the emerging markets, as the dollar was broadly bid and gained against other EM’s. It’s mainly due to the risk sentiment in EM’s and the US treasury market.

Also, markets will react to what the Fed says about the monetary policy on Wednesday (today),” said ETM market analyst, Halen Bothma.

Technical indicators show the rand fell more than 3% since March 19, according to Thomson Reuters data.

The rand looked ended April about 4.5% weaker - its worst monthly performance since summer 2016.

The SA Revenue Service reported on Monday that the country’s March trade balance swung to an R9.47billion surplus from a revised deficit of R603million in February.

Bonds remained weak, with the yield on the benchmark paper due in 2026 up 0.015 basis points to 8.19%.

Meanwhile, stocks gained on Monday on the back of a weaker rand, with rand hedge shares registering the biggest gains.

The all-share index rose 1.39%to 58252.12 points, while the benchmark JSE Top40 index was up by 1.45% to 51419.22 points.

“The rand is pushing up all our heavily weighted stocks. The rand hedges like British American Tobacco, Richemont and dual listers stocks are the ones benefiting,” said BP Bernstein equities trader, Vasili Girasis.

British American Tobacco closed at R687.21, up 1.64percent while Richemont saw a 0.56% gain to R118.88.

Mondi Limited was one of the positive movers, rising 5.28% to R363.96 after it announced its intended acquisition of an Egyptian industrial bag-maker and intended expansion into the Middle East.

Other movers included Bidvest Group, up 4.12percent to R245.13 and Barclays Africa Group, which rose 3.97% to R182.99.